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80/20 Rule of Marketing- Pareto
By Research Guru | September 28, 2009 at 06:43 PM EDT | No Comments

Some people questionned an earlier blog post about focusing on the top 100 customers.  The reason that people can often focus on their top 100 customers is that often the top 5 or 10 customers provide the majority of the revenue for an organization.  There can be exceptions.  Although often, what the top customers want is also often well in line with what other customers want.  Further, for many organizations that are doing little or no research at all - having an outside point of view is really helpful.

Pareto is the Economist who originally coined the 80/20 rule He noted that the 80/20 rule appliest to all sorts of things.  In his experience, 80% of his beans in his garden came from 20% of the seeds planted.

In politics, the "silent majority" is often looked at as the 80% while the "problems" come from 20% of the population that is "loudest."

In business, even if customers are the "top 100" revenue producing, this does not mean that they are all profitable.  Sometimes you may want to cull your "top customers" and quit marketing to organizations that tend to take up too much employee time or require special price breaks for everything.  Do not just look at revenue when you define your top 100 customers or when you are targetting potential customers.

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